If you’ve been an agent for more than a week, you know that real estate school left out some important lessons.
Perhaps they were afraid no one would follow through and pay to take the test for licensing if they shared everything you need to know.
The financial investment for new real estate agents
One of the first things that shocks new agents is how much it costs to get started. Many of the new agents who contact me are feeling mighty broke – and more than a little concerned about how long it’s going to be before they see a commission check.
First there’s the fee to take the test. Then, in my state at least, there’s a fee to be fingerprinted. Then there’s the fee to get the license, and if the agent is going to be a REALTOR® there’s a fee to NAR, to the State Association, and to at least one MLS. Unless their new broker is going to foot the bill, there’s a fee for E&O Insurance.
After that come promotional materials and the cost to distribute them.
School also fails to stress that as a real estate agent, you are an independent business person. You’re self-employed, and what you earn depends upon your activity – not just upon showing up for work each day.
The reality of being an independent business person: You MUST be a self-starter or you’ll fail.
An agent may join a firm that offers mentorship and/or support from a broker. They may even be supplied leads, at least at first.
But in the long term, no one is going to hand out the day’s assignments or hold agents accountable if they aren’t completed.
Going from an employee mindset to a independent business person mindset is a huge leap for anyone who has been used to following instructions and receiving a weekly paycheck.
Part two of that aspect: Agents MUST be financially disciplined.
With no weekly paycheck, agents must learn to budget, to save, and to resist splurge spending when a commission check comes in. It’s wise to set aside enough funds to pay for several months’ worth of personal expenses before buying a pair of expensive new shoes.
Real estate is an insecure business in that you never know how long it will be between checks. Even solid looking transactions can fail at the last minute, so it’s always best not to count any chickens that haven’t hatched.
Believe me, I know this firsthand. One summer I had two transactions in one month fail within a week of closing because the buyers decided to pay for a divorce instead of a house. (And one buyer had the nerve to ask for a return of her earnest money – after the sellers had kicked out their tenants.)
Budgeting and bookkeeping are vital for new real estate agents AND for seasoned agents.
I once knew two agents who got together to open a new brokerage. One was the broker in charge, the other became the “bookkeeper in charge.” Somehow, she didn’t comprehend the fact that they needed to pay for rent, utilities, and supplies, so every time a check came in, she found some new place to advertise. And boy did she find some iffy places!
Her partner was more than a bit upset when he learned that in spite of the money they’d both brought into the firm, there was no money to pay the bills at the first of the month.
Which brings me to Part three: The money you earn is not all yours.
Agents need to learn quickly that even if they have money set aside for a few months’ worth of personal expenses, they must NOT spend that entire commission check, because it isn’t all theirs.
The IRS and possibly the State has a first claim on it. Those who don’t set aside a good percentage to pay out at tax time can find themselves in a world of financial hurt.
Next is overhead. Agents have to purchase supplies and equipment and maintain a vehicle. They also have to purchase their own health insurance and contribute to their own retirement fund. If they choose to take a client out to dinner, there’s no employer to reimburse the cost on an expense account.
Agents must be good record keepers.
It’s essential to record and document all business related expenses to avoid paying more income tax than necessary. That includes keeping track of cash expenses, such as buying the coffee when you meet with a client or prospect.You could be amazed at how a few dollars here and there add up.
Top agents never stop learning.
You’re required to take continuing education classes, but if you limit yourself to that, you’ll fall behind. Learn all you can about your community, your market, marketing, real estate technology, and the people you hope to serve.
Read the posts on Active Rain and learn how other agents handle sticky situations. Attend classes that aren’t required. Ask questions.
And then there’s the question that often presents a dilemma for new real estate agents: “Where do I get the clients?”
It seems to me that this should be an important part of the education when learning how to become a real estate agent.
Instead, agents are sent out into the marketplace to sink or swim while they learn to market themselves through trial and error. I know I made a whole lot of errors, and some of them were expensive.
New agents often don’t realize that they must spend a good deal of time marketing. It’s not something they can do hit and miss, but must be part of their daily schedule. Many successful agents say they set aside two hours every day for marketing.
But what to do? Especially what to do first? When it comes to marketing, the sheer number of choices can be bewildering.
Here are my “Getting Started” recommendations for new real estate agents:
Announce Your New Career to Your Sphere of Influence
You might not realize it, but you do have a sphere of influence. It consists of all those folks who know you and like you – and it’s probably larger than you imagine. Think of all of your friends, all of your parents’ friends, all of your kids’ friends parents, all of the people your spouse works with, and all of the people who own businesses or work where you do business. Think of your hairdresser, mechanic, dog groomer, etc.
One of your first tasks upon becoming licensed should be to reach out to that sphere and let them know about your new career. But don’t say “I’m now a real estate agent and I’d like your business.” That just sounds like desperate begging. Instead, let them know that you want to be their information resource.
Toward that end, I’ve written a letter that you can customize and use before the day is over…
Get a good bio.
Not a resume’ – but a bio that shows who you are and how you’re going to help your clients. If you can afford it, have it written professionally. If you can’t, study my agent bio page and read through all these Active Rain posts.
Then write, refine, edit, and have someone proofread for you before you submit it anywhere.
Get that bio uploaded to your website and all of your social networking sites.
If you don’t have your own website yet, make full use of your profile page here on Active Rain to promote both yourself and your community, and blog every chance you get.
If you can’t yet afford the monthly fee, blog anyway, and take advantage of all the good advice shared by other members.
Enter that bio/profile on every other one of your networking sites – and if you haven’t joined LinkedIn, do so.
Take advantage of free stuff – especially the good advice for new real estate agents.
Visit http://promotemyrealestatecareer.com/, which is my site for new agents. You’ll find more links to free things and plenty of good advice, including the results of an Active Rain contest all about avoiding newbie mistakes.
Choose a niche and begin prospecting.
Stay focused, so you can learn all there is to know about your niche. Write your own letters or use mine, but don’t stop there. Get out and meet those people you’d like to have for clients some day.
Remember that it’s best to choose a group of people and market consistently to them. Expand the group as you can afford it, but don’t market hit and miss. It’s more effective to write to 50 people ten times than 500 people just once.
If you don’t write well – learn.
Learn the basics of grammar, spelling, and word selection so you can communicate effectively with blogging, writing prospecting letters, and even sending emails.
Get help, and ask a friend to proofread your work before you send it out.
Follow up on every lead – today, not next week.
We all know that it’s the wrong way to do it, but studies show that a good number of people use the first agent they speak with. Be that first agent whenever you can. Then stay in touch with those leads.
Agents told me they have far too many Internet buyer leads to keep up with personally, so I wrote a series of autoresponder letters to keep reminding them that you’re there and ready to help. https://copybymarte.com/nurturing-buyer-leads/
The #1 Most Important Long Term Success Step for New Real Estate Agents…
When you’re compiling that list of people who will receive your announcement, put them in a database – and an autoresponder. Then stay in touch regularly – by mail, by email, by phone, and by personal conversations. Don’t ever let them forget that YOU are their real estate resource.
And then there’s the step I wish my first broker had taught me: From your very first closing, start a similar database of past clients, and stay in touch with them without fail. When you do, they’ll turn into repeat clients and they’ll refer others to you.
These people are all golden. Don’t ignore them.
Book Image courtesy of pannawat at FreeDigitalPhotos.net
Money bag courtesy of stuart miles at freedigitalphotos.net
Stressed crazy lady courtesy of David Castillo Dominici at FreeDigitalPhotos.net.
Bookkeeping Image courtesy of Pong at FreeDigitalPhotos.net
Connected Image courtesy of cuteimage at FreeDigitalPhotos.net
Mailboxes Image courtesy of anankkml / FreeDigitalPhotos.net<